Adapting a program through learned experience

Great underwriting is more than just diligence at the outset; it's the continued hard work of reviewing past underwriting decisions and learning what we could have done differently to improve future results.

- Sam Ramsey, President - Windstorm Risk

Introduction 

Windstorm risk insurance fills a critical gap by providing protection for financial risk associated with tropical storms and hurricanes (named windstorms). DUAL’s experts work exclusively with regional and national wholesale brokers to provide custom-built solutions for commercial property owners in coastal regions of the US. Using an opportunistic yet conservative risk selection strategy, DUAL specializes in providing tailored, non-admitted coverage for a variety of commercial properties such as apartments, office buildings, group institutional housing, retail, and healthcare facilities.  

Case background 

DUAL Windstorm Risk’s team of expert underwriters has built the program's success on a foundation of three key pillars: underwriting, capital management and allocation, and claims handling. The combination of these three key pillars allows for detailed, disciplined coverage that delivers value to carrier partners and broker partners alike. The DUAL Windstorm Risk program focuses on commercial property all-risk coverage, including windstorm and named windstorm coverage in Tier 1 and Tier 2 counties of coastal US states. Though the team has extensive experience in this sector, some events call for a deeper dive into what coverages are truly needed in the market. 

Challenge 

DUAL’s key promise to brokers is to be in business “after the storm.” This is a valuable promise to partners, one that proved challenging industry-wide following Hurricane Michael in 2018. As a result of this devastating event, many competitors unfortunately suffered significant reductions in capacity or even went out of business completely, due to loss results.  

Resolution 

DUAL wanted to understand what would be needed to continue to succeed in this market. So, in partnership with Catalytic Claims Services, the DUAL Windstorm Risk team reviewed the actual claims history from Hurricane Michael. As a result, a few key insights were apparent, each of which contributed to lessons learned from the storms: 

1. Older and lesser constructed risks not built up to current Florida wind speed standards fared significantly worse in storms of this magnitude. It was also clear that flood or storm surge can be more damaging than high wind speeds.  

2. DUAL Windstorm Risk excludes flood and storm surge in most of its portfolio, which translated to fewer claims from those perils. In addition, every insured was, and still is, required to sign a flood acknowledgement letter stating they understand that flood or storm surge is not included in their coverage. These forms are mandatory to bind coverage and exist in every account file.  

3. Higher deductibles have a significant impact on results. It is evident, particularly inland, that many claims fell beneath deductibles. 

These measurable results led to savings provided for DUAL’s carriers on claims, increased retention of existing capacity partners, and contributed to a rise in new and increased capacity with several carrier partners. 

Lessons 

DUAL’s largest obstacle in this process was taking the time to review each claim file. This work was time-consuming but a necessary process to understand where there were gaps in DUAL’s underwriting guidelines. After the Hurricane Michael claims study, DUAL made the following underwriting guideline changes: 

1. Implemented tighter guidelines around risk acceptability for barrier island risks 

2. Began excluding older EIFS construction and EIFS without a solid substrate 

3. Built a scheduled property coverage extension form to clearly define coverage for ancillary items submitted on the Statement of Values 

4. Created tighter wind line setting guidelines that limit capacity deployment in volatile areas such as barrier islands and waterfront areas 

All these changes were validated in 2022 after Hurricane Ian, when DUAL’s actual losses incurred matched up closely to expected modeled losses, and the claims handling process was significantly expedited for average time to inspect the loss and average time to set a reserve for the loss. DUAL’s consistent feedback loop between DUAL’s claims and underwriting entities allows for "lessons learned" to be part of the program’s DNA. Ultimately, this case serves as a testament to DUAL’s willingness to reflect on market gaps and ensure a better future for partners. As the world evolves, so too must DUAL, in line with what is needed to weather the storm, based on real experience and proven data over time. 

The DUAL Windstorm Risk program is your trusted partner in the market, utilizing real learned experiences to enhance protection for those exposed to named windstorms in the coastal US. Our team of underwriters is deeply experienced in providing coverage for your clients, through regional and national wholesale brokers.  

For more information about our program or to get appointed with DUAL, contact us at www.dualinsurance.com/contact.